Forget Experience, It's About Customer Expectations

If you thought you had a handle on the future of retail, you may want to start thinking convenience and price as the biggest consumer drivers over the next five years.

In fact the biggest mistake retailers and all service based businesses are making is that consumers are very understanding about the cost of time they need to spend to be served. In my research, time is a commodity that businesses don't own, the consumer does. My advice for most is purge your business of all processes and policies that get in the way of customer expectations. It's their time not yours. 

A search on Customer Experience yielded 4.4 Billion hits on Google. That’s how many search options I receive when I type in Customer Experience. Everyone is in on it. From training organizations, consulting firms to technology companies. There is a sales pitch everywhere, everyone has an angle. I do wonder if anyone really has a solid strategy on how to zone in on any customer experience? I am quite confident, that despite many claims, there is no one approach fits all and therefore it would be misleading of me to claim one is better than another. However, during my career, we built our customer service from the inside out. Oh and we used that rare resource called people to deliver it. We developed the programs from within and trained from within. Culture, is everything when it comes to satisfying customers. But today I am going to try to change your opinion it’s not customer experience you're trying to resolve for, it’s customer expectations. Why? Customer expectations don’t always match the experience you are trying to deliver. In fact, we are most likely wrong than we are right.

First this, I am driven by healthy skepticism that I shoulder because I don’t like making any business judgements based on assumptions. So, I conduct research even if it is low level and it could need more detail, nevertheless, most of the time it turns out to be fairly accurate.

So here goes.

Consumers want more free personal time. I’ve dubbed it the coming leisure society. An article written in the 1960s started the forward thinking about how technology was going to change our lives and we would become utopian consumers enjoying the benefits of computers, AI, robotics and all of us would be the benefactors financially from these machines. Well, they were right machines have been monetized and you are benefiting only if you’ve invested in them early. However there is no question about our demand for leisure, the pandemic has seen to that as well. Work from home is not only possible it’s exposed us to what’s missing in our personal lives, more free time to do the things we want to do.

If we didn't have to work we wouldn't

Realistically, I don’t believe anyone wants to be on commuter trains, buses or driving on the highway to work if they had a choice. And some as we know are being offered those choices. And I believe that there is a difference between shopping for the mundane and shopping for personal satisfaction, retail therapy for anyone that insists that we call it that. Everyone likes to shop but shopping for pleasure versus the mundane needs in life are not the same. In addition the pandemic proved that consumers had no problem shifting to e-commerce and going out less, not having to deal with inconvenience. Another thing that most of us can do without. In essence I am of the conviction that when it comes to Customer Experience versus Customer Expectations we have it all wrong.

In fact, I was looking to validate that consumers will tolerate only so much friction and inconvenience. And that intolerance will continue to grow. Consumer behaviors have changed a great deal and if anyone believes that all of this will correct itself, they are in for a surprise. If I were leading another retail chain today my teams would be focused on eliminating all bottlenecks that impede service. In other words stop the friction become far more convenient.

What is Friction?

By the way my definition of F.R.I.C.T.I.O.N is as follows: “Flawed Reoccurring Instances Creating Tense Inconvenient Outcomes Needlessly.” Basically it speaks to the overwhelming processes retail operators create that lead to many of their problems with an overall and I use this loosely “experience.” However eliminating them is something that needs a different article and analysis. Even self-checkouts create friction.

To prove that convenience and price are drivers, I conducted a poll during the week of July 4th to July 11th of 2021. There were approximately 1,627 respondents to the poll, the target market was exclusively in Canada a country where E-commerce is growing, but not the same as it has in the U.K or is in the U.S. However over the next five years we will be looking at a even higher utilization of e-commerce because the pandemic has opened the door to more options and more importantly work from home which is growing everyday.

The question was quite simple.

“Which of these describes your sentiments to your preferred shopping experience?”

Options:

1. Convenience and fast service.

2. Want Personalized service.

3. Online - don’t have time.

4. Neither it’s about price.

Now how do you think that the voting went? Over the last five years watching retailers struggle, file for bankruptcy or bankruptcy protection I came to a conclusion that retailers are chasing the wrong strategies even with those claiming to have reinvented themselves. The growth and stability of convenience stores, resellers and off price have reinforced that for me. Many organizations want to believe that consumers will pay for great service. We’ve all been led to believe in the importance of customer experience and personalized service being staple elements that drive revenue. And some believe that the two are inseparable. Well in the old school of retailing that might have been true. And today this may only be an exclusive offering by premium and luxury retailers.

How did they vote?

“Which of these describes your sentiments to your preferred shopping experience?”

1. Convenience and fast service: 40.7%

2. Want personalized service: 11.9%

3. Online - Don’t have time: 14.0%

4. Neither it’s about price: 33.4%

What does it mean?

We should not be surprised that 40.7% of consumers expect convenience and fast service. But if you’re still thinking that’s an experience you’re wrong. It is an expectation that they have. It doesn’t mean they will not visit stores but for these consumers it has to be in and out. They don’t like friction, so would they more likely be drawn towards more e-commerce? Or self serve environments, that are technology driven?

I anticipated a much higher percentage of votes for personalized service likely in the mid 20’s. I was surprised at 11.9% . Some of the independent comments were very direct, that they couldn’t careless about personalized service for most it was about price. The mistake that many retailers are making is that everyone can be swayed by personalized service. That’s simply a fallacy statement built on the premise that the success of premium and luxury retailers is an example of what great service can deliver. If only retailing was really that easy. It is likely time to redefine what service really means in today’s context.

Consumers preferring online exclusively at 14%, this consumer may be pressed for time and they will do most of their shopping online, again online doesn’t mean lower cost but they will pay versus being tied up in a store. Make no mistake about this consumers are well aware of e-commerce they’ve tested it and trialed it, they know it’s an option. And we should expect this number to at least double in the next five to ten years. As this unfolds the physical retail world will need to adapt further. That may mean stores for the most part are just showrooms and return centres.

Then we have the last group 33.4% of them are price driven. Slightly over 1/3 of Canadian consumers will shop for price. I wasn’t surprised by this but I do expect it to overtake those who don’t like inconvenience and want faster service. And they will put up with friction and inconvenience to get it. They simply don’t care about anything else. For this group it’s about survival and making their household budget work. When 53% of Canadians are $200 away from insolvency and our debt keeps rising consumers will make more choices based on price. The problem for retailers, price drives less loyalty.

Summary

The pandemic while slowly getting under control, experts are telling us that we need to get ready for an environment where this virus will continue to be with us. We will have to go out and get a vaccine annually. Today approximately 30-33% of the population in the U.S. and Canada get the flu shot. That may not be comforting for 40% of the public that has underlying health issues or is just simply nervous about catching the virus even after the vaccine. In any event this, catalyst coupled with all sorts of time consuming inconveniences will only keep redefining how consumer choose to shop.

I am confident that consumers choosing convenience and fast service or being price driven will dominate the market today and will continue to do so over the next 10 years. If you take anything from this it’s that consumers want more free time and that means for their Leisure. I view this as the birth of the Leisure Society and they will be looking to spend it traveling, dining out, going to theatres, fitness centres and some retail therapy, versus being stuck in a line up waiting their turn.

My name is George Minakakis I am the CEO of Inception Retail Group Inc. I Revive and Build Retailers for a living. For fun, I write, co-host a podcast "The Business of Retail" and will be releasing an upcoming book "The New Bricks & Mortar - Future Proofing Retail"